Who are traders
Traders are people who trade on exchanges. There are two types of exchanges – classic stock exchanges and cryptocurrency exchanges. On this basis, traders can be divided into two categories:
- Classic traders;
- Crypto traders.
Traders trading on classic exchanges. According to experts in the world of such traders, there are from 1 million to 1.5 million people. Here the data from different sources vary, just as the calculation methods differ. Many traders do not consider exchange trading as their main type of income, as well as a large number of people quit trading, as they fail in this area.
Traders who trade on cryptocurrency exchanges are called crypto traders. According to experts, made on the basis of cryptocurrency exchanges, there are more than 10 million people in the world of crypto traders. There is also no unambiguous data, as most traders do not trade on an ongoing basis, and from time to time they themselves do not consider themselves traders, and they consider trading more as entertainment than a constant source of income.
However, the number of crypto traders is several times greater than the number of classic traders. Such a huge excess is due to the easy access to cryptocurrency exchanges. Anyone can register on a cryptocurrency exchange and start trading, while classic trading requires certain conditions, the availability of accreditations, education, as well as the requirements for the minimum deposit size to start trading.
Despite the fact that most of all there are critical currency traders in the world, the classification considered below is made for classical traders, who are a minority.
The fact is that cryptocurrency trading appeared only in 2010 from the moment the first crypto exchanges appeared and its own classification has not yet developed. Nevertheless, many terms used in classical trading are also used for crypto traders, taking into account the specifics of crypto trading.
Trading types of traders
Consider the main types of traders. The separation of traders by type occurs on various grounds. Therefore, there are several classifications of traders.
Depending on how long traders prefer to trade, they are divided into:
- Medium term
- Day traders
Scalpers – prefer short trades and small intervals. They play on price fluctuations. For them, often the currency or asset they trade is not important, the main thing for them is the price movement in one direction. They play on the trend. Buy cheaper, sell more expensive.
They use mainly technical analysis in their work, which they are very well versed in. Such traders live at the expense of large trading volumes, making several transactions per day.
Classic assets are much more stable than cryptocurrencies. Against the background of news, cryptocurrencies per day can grow by 50% or even more. Cryptocurrencies are less susceptible to technical analysis, nevertheless, their trends can be traced much more clearly than in classic assets.
On cryptocurrency exchanges, various frauds and strategies that have long been banned on classical exchanges are still widely used. Due to the large daily volatility of cryptocurrencies, scalping is widely used in the field of crypto trading, even much wider than in classical trading. On most crypto exchanges, forbidden strategies such as Pump and Dump thrive, which have long ceased to be used on classic exchanges, subject to much more stringent government regulation.
Despite the apparent simplicity and accessibility, crypto trading is much more unpredictable than classical and losing money on cryptotrading is much easier than on classical trading.
Since scalping, for the most part, uses technical analysis, many traders who use the scalping strategy use trading bots that are most suitable for scalping. It should also be noted that the work of trading bots is much more effective in classical trading than in crypto trading. There are practically no good and reliable bots for crypto trading, although a lot of development is being done in this area and gradually these bots are being improved, just like crypto trading itself becomes more predictable.
Medium-term conscripts – make transactions for medium terms. For transactions, they are more focused on the news than on technical analysis. They take it not by the number of completed transactions, but by their quality. For this purpose, they carefully study the news of various assets or choose those assets for which news, annual or quarterly reports are published. If there is no news, then such traders either temporarily stop trading or change assets.
As for cryptocurrencies, they are extremely sensitive to the news. However, the price of a cryptocurrency reacts sharply to news and traders can make good money on both negative and positive news. But you need to follow the news, but this takes time and you can’t always entrust such work to the bot. Although at the moment there are special bots that track the news. Specialized bots began to appear for crypto trading.
For a long time conscripts – prefer long investment periods. Such traders can be classified as investors, since assets are sometimes bought for a year, and can be bought for 10 years. The main feature of long-term trading is a careful selection of assets.
At the same time, long-term traders are not interested in this minute news, they are only interested in news that can affect the price of an asset in the future, such news as information about strategic partners, new directions of activity, and access to new markets. They are interested in fundamentally important information. Long-term trading is one of the most difficult areas of trading, where the trader is required to conduct the most thorough analysis, selection of assets and constant strategic decisions.
In cryptocurrencies, long-term traders are called holders, that is, people who prefer to store assets, hoping to increase their price in the future.
Day traders are a type of scalpers. They prefer to open and close transactions within one day, and for one constantly record their profits (or losses). Often, such traders use technical analysis and bots.
Types of traders regarding behavior
The concept of “bulls” and “bears” came from the classical market and is quite firmly established in the field of cryptocurrency trading. The name comes from the habits of these two strong and powerful animals. Bulls raise their enemy to the horns. Bears push the enemy to the ground, that is, they press down on him.
Initially, the terms “bulls” and “bears” referred only to large traders who are capable of influencing the price of an asset with the volume of their capital. In the future, these terms began to apply to all traders who, when combined, through their coordinated actions, contribute to raising or lowering the price.
“Bulls” are traders who buy assets by playing to increase them. When buying assets, they create a rush around them, thereby raising their price. At the peak of the price, they are disposing of assets.
“Bears” play at lower prices. Initially, this term refers to large traders who are able with their capital to bring down the price of an asset. Subsequently, the term began to be used to refer to the category of traders who begin to sell assets in order to lower their price. In the future, when the price of an asset drops to a minimum, they re-buy the asset at a lower price.
Psychological types of traders
Depending on their behavior, traders are divided into the following psychological types:
- Intellectual Traders
- Intuitive Traders
- Instinctive traders
Trade based on the information received. Carefully monitor all the news regarding the assets that interest them, analyze the assets before buying and selling. For them, the main information that they study and track in detail. For this purpose, they can use various bots, but they make the final decision on their own. Bots are just additional supporting material.
Trust their intuition more. However, intuition is often based on vast personal experience and is an auxiliary material that helps them in cases of uncertainty. As the previous experience of such traders shows, in difficult situations, intuition helps them quickly and correctly make good decisions.
Trust their instincts, more prone to sensory evaluation and emotions than logic and sound analysis. Sometimes instincts help make the right decision, but in most cases instincts lead to mistakes. Emotions and trade rarely give a positive result. Often, traders subject to emotional valuation make hasty and not balanced decisions, which leads to monetary errors. Often, after the results of such errors, traders quit trading, having lost quite large sums of money.